Expert Committee of MCA suggests Audit Firms to practice Law, appeals to amend Advocates Act [Read Report]

The Committee of Experts formed by the Ministry of Corporate Affairs (MCA) has suggested the Government to allow the audit firms to practice law and to incorporate necessary amendments to the Advocates Act for this.

According to the report submitted by the CoE, one major hurdle in the growth of Indian audit firms is the lack of development in MDPs in India.

“Quality auditing requires specialists in many areas like law, valuation, IT systems, acturial etc. The need for specialisation increases with the complexity of the business model of the client,” it said.

“Even during the stakeholders’ meetings it emerged that most of them including audit firms, professional institutes and industry associations favour development of MDPs in India. Therefore, the COE is strongly of the view that MDPs are the need of the hour for the Indian economy,” it added.

The Committee opined that fundamental legal reforms would be necessary to facilitate development of MDPs in India.

The COE is of the view that MDPs would be beneficial for Indian corporates.

“In sync with this demand, law firms as well as audit firms are already expanding the portfolio of services they offer to their clients. However, archaic laws and regulations, especially the ones on the legal profession, impose unnecessary hurdles in the smooth development of MDPs. For Indian firms to evolve into global leaders in auditing, legal, consultancy, and ancilliary services, it is necessary to rationalise the Advocates Act, 1961 to facilitate development of Indian law firms as well as audit firms into MDPs. The UK Legal Services Act, 2007 provides a useful template which could serve as a starting point for Indian legal reforms,” the report said.